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Spaceport gets NM OK for $21 million loan for visitor centers

Borrowed money would not pay for Hatch center, officials say

Staff and wire report

Posted:
07/18/2013 05:24:15 PM MDT

SANTA FE, N.M. (AP) >> Spaceport America, which was built with nearly a quarter of a billion dollars in taxpayer money, is taking out a $21 million loan to build two visitor centers in southern New Mexico.

Gov. Susana Martinez and other members of the state Board of Finance voted unanimously Wednesday to let the Spaceport Authority seek the private loans for the centers, despite concerns the state could be left holding the tab.

The loan will not pay for a visitor center in Hatch -- a long-promised project that has been stalled because the spaceport can't find a suitable and affordable piece of land, spaceport officials said. Instead, it will pay for centers in Truth or Consequences and at the remote spaceport site just north of the Doña Ana County line.

The spaceport's $209 million budget two years ago had some $15 million targeted for the visitor centers. But that shrank as other expenses mounted, including an appropriation of $7 million to extend the runway at the request of anchor tenant Virgin Galactic. State funds were used to design the buildings and buy land, but the authority needs a loan to build them, officials said.

Spaceport officials said they have several banks interested in financing the projects, and a loan could be secured in about 30 days. Construction could begin soon after that.

"We are thrilled," Executive Director Christine Anderson told the Albuquerque Journal after the meeting. "This was critical for the success of our business model."

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She said the centers are a crucial element for drawing visitors to the spaceport, where Richard Branson's Virgin Galactic plans to take tourists into space for $200,000 a head. Virgin Galactic has said those flights could begin by the end of this year.

But the spaceport's business model also relies on an anticipated 200,000 annual visitors to the spaceport, which will feature a variety of space-related attractions for families.

Anderson said the Spaceport Authority will pay back the loan using revenue from visitor fees and an annual licensing fee from a third-party vendor that will operate the centers. Some board members expressed concern that the state could be forced to pay back the loan if the visitor numbers prove to be overly optimistic.

The idea for a loan is a change of directions by spaceport officials. Earlier this year, they said they planned to go through a procurement process to find a developer and financier for the two centers; the state would then enter into a long-term lease to use the buildings once they were constructed.

But state Spaceport Authority Board Chairman Rick Holdridge of Deming said a problem with that course of action was that none of the proposals that were submitted by respondents in the bid process were deemed by the agency to be "acceptable." He said the new, loan approach could be better because the agency will skip the middleman to get a good rate.

"We will negotiate with various financing sources, and it won't cost the taxpayers anything," he said. "The only thing that will be offered as collateral is what the loan pays for."

Hatch project stalled

As far as Hatch goes, Holdridge said the Spaceport Authority has been held up because it hasn't found a suitable location that's also affordable. Also, because the southern road to the spaceport isn't paved yet, that poses another problem because it's unlikely tour buses from a Hatch center would be able to drive the dirt route that currently exists, he said.

"Hatch will be coming as soon as we find a piece of property and get the financing on that," he said.

One of the visitor centers to be paid for by the loan would be built at Spaceport America itself. A smaller one would be built off Interstate 25 near Truth or Consequences. From there, visitors would be shuttled about 30 miles to the spaceport.